City never compensated for street engulfed by Champions Square

The city of New Orleans has tried and failed for six years to negotiate a lease with the state for a block-long stretch of LaSalle Street next to the Mercedes-Benz Superdome.

And public records show that while those talks stalled, the state’s Superdome Commission went ahead and turned the city’s street into a nearly indistinguishable part of the Champions Square entertainment venue, without ever paying compensation.

This revelation, first uncovered by blogger Jason Berry and published at www.theamericanzombie.com, has raised concerns that the state’s Louisiana Stadium and Exposition District, commonly called the Superdome Commission, has taken control over a city asset without a written agreement to do so, without proper approval from the City Council and without giving the cash-strapped city the money it estimates the street is worth.

Public documents gathered by Berry show the LSED and the city began negotiating a lease for the street in mid-2010, as the LSED was building Champions Square alongside the 1400 block of LaSalle Street, on property the LSED leases from New Orleans Saints owner Tom Benson’s company Zelia LLC.

But the city and the state acknowledge those negotiations broke down without coming to an agreement.

Meanwhile, public access to the street has been blocked at times, usually for private or special events run by the LSED’s property management contractor, SMG. That has added to confusion about whether the 1400 block of LaSalle remains a city street. When WWL-TV set up a camera this week on what used to be the LaSalle Street roadway, a security guard from the Zelia-owned Benson Tower office building told the photographer he couldn’t shoot video there.

“Actually, all this is private property. It’s not a street,” the guard said, his voice captured on video.

Benson’s property management spokeswoman, Maureen Clary of Corporate Realty, said the guard was mistaken and it has never been Zelia’s practice to restrict public access to LaSalle Street.

The LSED leased what became Champions Square from Zelia in 2009, but that agreement says nothing about the use of LaSalle Street, which is not part of Zelia’s property.

In his blog, Berry claims that Benson’s company has benefited for the last six years from unfettered use of the street, citing a provision of the LSED’s lease allowing Zelia to potentially share in net profits with the LSED from the events held at Champion’s Square.

But Clary says the property has never made enough money to trigger the lease’s profit-sharing provisions, so the only money Benson’s company gets for Champions Square is the annual lease payment, a flat amount of more than $2 million that rises each year, but has nothing to do with how many concerts and other events are held that might take advantage of the street being closed.

The LSED confirmed it has never made additional rent or profit-sharing payments to Zelia under its lease.

That leaves two public entities, the city and the LSED, to work out an agreement for the LaSalle Street right-of-way. In 2011, the LSED’s attorneys sent a “good-faith” letter to the city saying it intended to lease the street, but needed to start improving the 1400 block of LaSalle Street right away as a part of its Champions Square project.

The LSED’s current attorney, Shawn Bridgewater-Normand, said the state agency never could agree with the city’s valuation of the street, which the city estimated at $3.3 million in 2016, according to a document provided to WWL-TV by the city.

Bridgewater-Normand also said the city never properly accounted for what the LSED spent on maintenance and improvements to the street, including pavers matching the rest of Champions Square and ballards blocking traffic.

But the city has a long history of leasing or selling city streets and collecting money up-front, based on a valuation of the street and regardless of how much the purchaser might improve it. For example, an entity affiliated with Harrah’s casino paid $3.5 million in 2006 for the right to shut down and take over a block of Fulton Street, which it developed into a pedestrian mall lined with busy restaurants and shops.

In the case of LaSalle Street, however, the LSED made its improvements to the street before any lease or compensation plan was worked out. That means the deal never came before the City Council for ratification by ordinance, as required by the City Charter. The LSED paid for city permits to put up structures and signs on the street, but never paid a deposit for a lease, as Mayor Mitch Landrieu’s administration requested in 2011.

“Surely an agreement, I would say, would need to be or should have been put in place,” said Councilwoman LaToya Cantrell, whose district includes the Superdome area and who is running for mayor.

Cantrell was not on the council when the lease was first being negotiated. The District B councilwoman at the time, Stacy Head, is now an at-large councilwoman, but she declined to comment on the lack of a lease for LaSalle Street.

Former Chief Deputy Mayor Andy Kopplin told WWL-TV that he and others at the city have spent years negotiating with the state Division of Administration on a land-swap deal that would transfer that block of LaSalle Street to the state.

Bridgewater-Normand said the LSED was never part of those negotiations; nor was the LSED aware of an agreement-in-principle the city struck with former Gov. Bobby Jindal’s administration on Jan. 10, 2016, the last full day Jindal was governor.

That agreement, which seeks to transfer the 1400 block of LaSalle Street to the state in exchange for the state-owned portion of Duncan Plaza in front of City Hall and the adjacent Health Education Authority of Louisiana parking garage, still requires the city to come up with as much as $8.5 million more to make it an even swap.

Kopplin said the city doesn’t have that money now and is hoping to convince the state to give the city credit for millions it spent in the process of expropriating land in Mid-City for the Veteran’s Administration hospital complex.